Is there beef between Chalmers and Albanese? And, we talk Palestine, and productivity mixed-messages
August 14, 2025 • 26 mins
This week the Albanese government announced it would recognise Palestine as a state, a huge foreign policy shift that was greeted with approval by many and criticism by others.
Plus, the Reserve Bank assumes a fall in productivity right before the government's productivity summit, and is there tension between the PM and Treasurer?
Joining Jacqueline Maley to discuss is chief political correspondent Paul Sakkal.
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S1 (00:00):
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics. I'm Jacqueline Maley, it's Friday, August 15th.
This week, the Albanese government announced it would recognise Palestine
as a state. A huge foreign policy shift that was
greeted with approval by many and criticism by many others. Plus,
(00:21):
we got decidedly mixed messages about next week's Productivity Roundtable.
Joining me to discuss, we have our chief political correspondent, Paul. Welcome, Paul.
S2 (00:31):
Hi, Jackie.
S1 (00:37):
So what exactly happened inside the Albanese cabinet in the
lead up to this decision to recognise Palestinian statehood? Because
just a few weeks ago, like even two weeks ago,
I think the PM was saying that the recognition was
not imminent. And yet, here we are. Has he got
a different definition of imminence to us?
S2 (00:56):
Politicians always have tricky language around what decisions have been
made yet. What is not imminent? What they have plans
to do or don't have plans to do? But I
think this was this was a case that was less
about him using tricky language and more about just a
rapidly shifting global dynamic on this issue. You said a
(01:17):
couple of weeks or a few weeks there in your intro.
I think it was actually 11 days between the Prime
Minister going on insiders on a Sunday and his call
with the Israeli Prime Minister, Benjamin Netanyahu, where he effectively
in a it was last Thursday night at about 7:00,
they had about approximately 40 minute call, which is quite long.
(01:37):
And Albanese flagged his intent to the Israeli prime minister
and said they were moving towards recognition sooner rather than later.
They ended up making that call publicly on the Monday
after the Thursday. So two weeks and one day after
his insiders appearance. And on that insiders appearance, which was
the same day as the French president, Emmanuel Macron, announced
(01:59):
that he would try and lead the Western world into
this pro-Palestinian push. Our Prime Minister said that there were
very strict red lines that he had around recognition. Any
role for Hamas would not be contemplated, and he would
not do anything that was symbolic or token or what
would be perceived as a gesture. But that all moved
very quickly.
S1 (02:19):
Yeah, okay. I mean, some of his critics are saying, oh,
it's all for reasons of domestic politics, which seems like
a strange criticism to me because of course, the Prime
Minister is going to be interested in domestic politics. That's
kind of his job. But was that the primary, in
your understanding? Was that the primary motivator, or was it
international forces like your Emmanuel Macron's who are basically saying,
(02:40):
come and join this coalition and we'll try to end
this conflict this way?
S2 (02:44):
I think the international politics was what triggered the very
hasty move into a public recognition of a Palestinian state.
Over the last two weeks, you had France, you had Canada,
you had the UK all nearly back to back. They
are the countries with whom we've moved in lockstep on
(03:04):
our positioning on Palestine. And the view inside the government
is that we're a middle power. We have very little
role in Middle East politics, but we're also a respected voice.
We're a respected voice in the Israeli political community. We're
a respected voice in South East Asia, where there are
some very large Muslim countries that have Muslim majority countries
that have close, very strong feelings about the Palestinian question.
(03:28):
And we're a respected voice in in international affairs. We
often punch above our weight in diplomatic forums fora. So
the cover that was provided by those nations moving quickly
on recognition, meant that Albanese and his cabinet were able
to fulfill the commitment that they had made in previous
(03:49):
policy platforms of the Labor Party. And those commitments to
recognise the Palestinian state at some point in the future
were driven by domestic politics and in internal labour feeling
on the Palestinian question. There's been for about a decade
now huge internal grassroots push within labor for them to
take a stronger pro-Palestinian stance. And this movement from our
(04:10):
like minded nations allowed that to come to life.
S1 (04:15):
I suppose the criticism is that it's or the sort
of strange thing is that it's not coming in response
to any sort of moves in a positive direction from
Palestinian authorities or towards any sort of outbreak of democracy
or democratic institutions within Gaza and the West Bank. But
it's more coming from the need seen by countries like Australia,
(04:37):
to put international pressure on Israel to end the conflict
or make moves towards ending the conflict.
S2 (04:43):
I think that's spot on. Its recognition in previous eras
of thinking has not really been conceived of as a
diplomatic tool to create change, but because of Israel's increasingly
unjustifiable war effort that has isolated it so dramatically. The
balance is tipped away from them from the Israeli view
(05:05):
and Western nations, which have previously been allied to Israel
and do still have friendly relations, are so exasperated by
what's going on that they have decided to use recognition
as a tool to try and create change and, and
and potentially dissuade Israel from continuing, but also to persuade
some of the Arab nations and the US to get
(05:25):
involved and bring an end to this war.
S1 (05:27):
What was the sort of political reaction to the decision
at home?
S2 (05:30):
It was all very stock standard.
S3 (05:32):
For this government to take this action offends every fair thinking,
decent Australian.
S2 (05:38):
The opposition jumped back into its fervently pro-Israel position that
characterised a lot of the politics under Peter Dutton.
S3 (05:47):
To recognise unilaterally, a Palestinian state does one thing for
the terrorists it rewards them and it emboldens them.
S2 (05:56):
The sections of the media, particularly News Corp, uh, quickly
branded Anthony Albanese, a friend of Hamas, for making this decision.
The tabloids in each of the cities and the Courier Mail,
The Daily Telegraph, the Herald Sun and the Adi, I
think all had very similar looking splashes on whichever day
the next day was the Tuesday. All of them mentioning
(06:16):
Hamas and how this was a win for them, which
is obviously contested. I think what was telling also was
to your question, Jackie, about whether this was driven by
domestic politics. Labour backbenchers absolutely pumped this news out on
their social media feeds. On the Monday and Tuesday, you
could see how much it was a pressure release valve
(06:36):
for a lot of Labour MPs, particularly those on the left,
who had spent months and months getting absolutely hammered by activists,
but also increasingly non-activists who are fed up with what
they're seeing on their TV screens and who believe that
Labour hasn't quite done enough. So it was a pressure
release valve for the Labour Party. It was met with
(06:56):
a shrug of the shoulders from the hard left pro-Palestinian
movement who said this This will do nothing on the
ground and who want to see more. What they say
is practical sanctions. The government says that it has no
real power to sanction Israel anyway. And they would also
be symbolic. So pretty expected reactions from across the political spectrum.
S1 (07:14):
Yeah, yeah. It's interesting you say that about the backbenchers. And,
you know, all these MPs are particularly, as you say,
Labour MPs getting a lot of mail on this subject.
And Albanese, you know, he's in an electorate that's very
heavily sort of you know, the Greens are his main
opposition in Grayndler in Sydney's inner west. I mean, it's
a huge issue within that electorate. So he'd be filling
(07:36):
it at home as well.
S2 (07:37):
Totally. And he's had to, uh, he's had to deal
with protests outside his electorate office for long periods that
had blocked his staff being able to go to work.
And just on that question of MPs receiving mail for
a long time, there's been this narrative that this is
not within the top set of issues in the Australian electorate,
and I think that a lot of weight can probably
be put in that argument. But I heard an interesting
(07:57):
view from Jerome Laxale, who's the member for Bennelong in
Sydney's inner inner north. Many of our listeners would know
that electorate well. And he said that this has been
the number one, two and three issue in his inbox
for a long period of time. And I said to him,
does that include the inflation crisis and all other top
of mind issues? And he said this is the biggest one.
(08:18):
It's not just activists. It's not just Change.org bots. It's
people in his electorate concerned.
S1 (08:25):
Yeah, I think once you get images of starving children
on the television, people do tend to get upset. Coming
back home to some of these pertinent to the domestic
economy issues. Next week. Are you excited? Are you getting pumped?
Have you got your outfits planned for Canberra? Coachella?
S2 (08:47):
Have you booked your room because the Airbnbs are chockers,
I hear.
S1 (08:52):
Of course we're talking about the Productivity Summit or Roundtable,
if you will, which is happening next week, and we're
getting a lot of mixed messages about it. In fact,
if you're trying to like me, you're trying to fashion
a coherent narrative in the sort of lead up to
this summit. It's almost impossible because on the one hand,
you know, Albanese is going, yes, we're open to big reform.
(09:12):
We want to be a big reforming government, just kind
of maybe not now. And they're pouring cold water on
almost every idea that's come up in in the lead up.
What what is the latest news? Can you cut through
this all to tell us what's really going on?
S2 (09:26):
I do not blame you for not being able to
form a coherent understanding of where this is all going.
And the blame for that lies at the feet of
the Prime Minister and the treasurer, who haven't really been
able to set a coherent message up in terms of
what they are trying to solve and what the solutions
are and what the trade offs are inherent in those solutions.
(09:49):
They talk a lot about the productivity challenge. Famously, we've
talked about this in this podcast many times. That's a
word that not many people understand. Yeah. So if you're
trying to set up a get public sentiment to the
place where they understand that there is a big problem
that needs to be solved, that affects their hip pocket,
and that doing some of these big changes that might
have losers on the tax side, or the workplace relations side,
(10:10):
or anything else to allow those people to understand that
they are still worth pursuing because they make everyone better off. Overall,
then critics have a fair argument. I think at this point,
to say that the government hasn't been doing that kind
of shaping of public opinion.
S1 (10:25):
Yeah, well, maybe they're hoping that the Productivity Roundtable itself
will do some of that work on productivity. And as
our friend of the podcast, Shane Wright, is fond of
telling us, productivity is not about working harder, it's about
working smarter. But we did get some productivity data this
week that was sort of hidden amid the good news
(10:46):
of the RBA cutting rates. What was that productivity number?
S2 (10:51):
This is one of those moments where you think to yourself,
why on earth would you be a politician? Jim Chalmers
is just I was just thinking about what his office
would have been feeling at this moment. So he's just
gone through an inflation crisis. Rates are finally coming down.
He can claim a lot of credit for that and does.
It's within the target rate band. And we're probably going
to see some more interest rate cuts.
S4 (11:12):
These interest rate cuts and the progress that we've made
in our economy, they put us in good stead for
the global uncertainty that surrounds us and for the big
economic challenges which confront us as well, inflation.
S2 (11:26):
And then Michelle Bullock, the reserve Bank governor, releases a
statement saying rates are down. Good news. Jim Chalmers hope
she does a press conference saying there'll be future rate cuts.
People feel happy in their homes and pleased towards the
government and then bang the RBA at that moment, at
that same afternoon, decide to release their updated, uh, assumptions
on what will happen to productivity over the next few years.
S5 (11:50):
That for the purposes of our forecast period, we think
that the productivity assumption needs to be a bit lower. Interestingly, um,
the reason one of the reasons we've come to this
position is that our forecasts were such that we were
hitting our employment and our inflation forecasts, but we were
(12:10):
overestimating our GDP and our consumption forecasts. So there was
a tension in the forecast. Why were we hitting our
targets when we weren't hitting?
S2 (12:19):
And and they use those assumptions to do their forecasting
around growth and rates and the trajectory for the economy,
because all of those help flow into their decision making
around monetary policy. And this productivity assumption drops from 1%
over the next few years to 0.7 of a percent,
which has actually been closer to the average rate of
(12:41):
productivity over over the last 5 or 10 years. And
those numbers seem very close to the lay observer. But
if you had Shane write on here, and I'm sure
he's raring to go ahead of next week's Productivity Roundtable,
he'll tell you that, uh, that change in productivity in
a yearly basis over a long period of time has
a significant effect on economic growth, on living standards, on
(13:04):
how much people's wages will rise, because it effectively means
that we're not using our resources and our inputs as
effectively as possible, and people will be, on average, poorer
compared to the 1%. So Jim Chalmers sits there thinking
it's meant to be a fantastic day for me. And
then the next day's headlines, page one, I think of
the Australian Financial Review and our paper were all leading
(13:25):
off on the double edged nature of the news being
rate cut, yes, but worse productivity and pretty bad timing
ahead of next week's roundtable.
S1 (13:32):
You can always trust an econocrats to kind of come
in and rain on everybody's parade.
S2 (13:38):
They're just so negative.
S1 (13:39):
Yeah, I know. They're so, so negative. It looks now
like housing and housing approvals are going to be a
focus of the Productivity Summit. And you wrote about that
this week. Tell us what's going on with housing approvals
and how that can lift productivity.
S2 (13:54):
Well the government's done a lot of tamping down of
expectation on areas such as tax reform items like the
capital gains tax, negative gearing, which we've heard so much
about over the years, about how they are good reforms that, yes,
create losers but are still worthwhile. The government is doing
a lot of backgrounding in the last week or so
(14:15):
to say that those big items around tax and other
contentious issues will not be the ones that are immediately
solved at next week's roundtable. There might be set up
for more work after the roundtable, after a debate has
started and then pursued in future budgets. But next week,
the agenda has been narrowed to red tape and excessive regulation,
(14:36):
and how to get the economy and key areas of
supply moving more quickly. There is broad consensus across mining
firms who want to build mines more quickly. Among green
energy firms, who want to get solar and wind farms
up more quickly than they currently are, and they are
very slow. These approval processes and construction firms who want
(14:56):
to build housing. There's broad consensus as well as inside
the cabinet that the environmental laws are clogging up the
building of all of these types of items, and causing
us to move less quickly than we can on the
green energy transition, and to build far fewer houses than
we need to. So there's a big effort behind the
scenes to get to fix some of that.
S1 (15:15):
Yeah. And I feel like, you know, the government's got
a lot of skin in the game. On the housing
approval issue, particularly because they've promised to build so much housing.
And it is actually one thing where the opposition can
very credibly say, you said that you would build, you know,
10,000 homes and actually only one has been built. So
it's something where the report card is very easily kind
(15:35):
of tallied up. There's also road user charges, which is
maybe not a sexy subject, but quite an interesting one
because it sort of points to the difference, you know,
a transition, an economic transition and an environmental transition away
from petrol cars. Yeah, I'm sure there's a different word
for them. But cars that use petrol and EVs.
S2 (15:56):
So diesel combustion engines, I think they call them.
S1 (15:59):
That's the one that I'm talking about. To me, cars
are just red cars, blue cars, white cars, etc..
S2 (16:04):
What car do you have?
S1 (16:04):
Um, I've got a dark blue, a midnight blue, um,
and it uses petrol. So more and more people are
taking up EVs. You know, that's obviously an industry that
will help us move towards the energy transition that we
need to make. But that means that fuel excise goes
down because fuel excise is essentially a tax on petrol.
The fewer people using petrol, the less money the government
(16:27):
collects in fuel excise. So what are they going to
do to make up that revenue?
S2 (16:32):
Well, they're moving towards a road user charge that will
bring in EV drivers. Our proportion of EVs is is
still far fewer than uh, some countries like China, which
has moved much more quickly in that direction. There seems
to be in Australia an attachment to using petrol cars,
but we are moving more quickly. In the last couple
(16:52):
of years, a bigger and bigger proportion of cars being
sold are EVs. And Jim Chalmers has been flagging this
for quite a while, for years really into well into
the first term of his government. He was flagging work
with the states to fix the fuel excise issue. In
a similar vein, fuel excise. The tobacco excise is also
facing huge black holes, and these are really critical because
(17:15):
of the booming black market for tobacco. So between fuel,
fuel and tobacco that they're actually key federal revenue sources.
And over time, if those black holes continue to enlarge,
and that's a really bad thing for our budget. So
there will be something on the on the road user
charge at some point over the next few months, it
looks like, and there'll be trials on which cars will
(17:37):
be which EVs will be dragged into it and at
what point. But we're kind of yet to see the
detail on that.
S1 (17:42):
Yeah. Okay. And on a more popular sort of note,
there has been the prospect raised of a four day week.
So the ACTU has made headlines about this. Business groups
are very up in arms about it. It seems to
me it's putting the cart a little bit before the horse,
because don't you need productivity gains before you can drop
back to four days a week? But I don't want to,
you know, I don't want to pour cold water on this.
(18:03):
What has the government said about the prospect of a
four day working week? Good things.
S2 (18:07):
They're pretty cold on it.
S1 (18:08):
Can I take tomorrow off?
S2 (18:10):
Well, when they start printing just four newspapers in a week,
maybe we can. We can. We can have a four
day week, too.
S1 (18:16):
Let's not put the idea in their head.
S2 (18:18):
Um, the four day workweek won't get much traction with
orthodox economists, because one of the key benefits of productivity
over time, when you can get your society working more efficiently.
One of the byproducts of productivity is not just increased wages,
it's actually increased leisure time. Yeah. And if you look
(18:39):
over time, productivity grows and so does the amount of
time you get to spend at home with your family,
or going to the footy or writing books or doing
whatever else. So economists will laugh that that idea out
the door.
S1 (18:49):
Okay. Um, well, I don't know. Maybe we can we
can look to the robots to, um, make up that
fifth day for us. I the other thing that's again,
speaking of populist appeal, there have been some reports of
tension between Anthony Albanese and Jim Chalmers leading up to
this summit. I don't know if this is just the
work of hopeful journalists, you know, hoping for some internal
conflict that they can report on. Far be it from
(19:12):
me to, you know, suspect journalists of wanting conflict that
they can then make headlines out of. But, I mean,
it does seem like Chalmers is a little bit more
open to reform, particularly tax reform. Albanese seems to have
a much more cautious and risk averse approach. And they're
coming from different directions. Right. Like they've got slightly different
objectives and they've got different personal interests and maybe even
(19:34):
different political interests. So what's your take on on the
Albanese v Chalmers beef?
S2 (19:40):
Yeah. Well the starting point I don't think it's a beef.
So I'm going to disappoint listeners there. The starting point
is what you've just said that they they do have
different roles in the government.
S1 (19:49):
Can we call it a stoush. A fight?
S2 (19:52):
I think it's I think it's even more gray than that.
There's something in the in the differences of, um, there's
there's something there in the difference of approach And the
different intents they have and potentially how open they are
to to moving more quickly. But they have a pretty
close working relationship. Uh, there's not been any overt public
(20:12):
feud in between them, which is unlike Howard and Costello.
And unlike Hawke and Keating, their feuds were much more clear.
There's more nuance in this one, but I'm not suggesting
there's no feud in at all. Fundamentally, Chalmers is hyper
ambitious and eventually wants to become the Prime Minister. He
can't say that at this point. The Prime Minister has
(20:32):
just had a thumping election win, so he's pretty comfortable
in his own shoes and doesn't need to worry as
much about the rivals underneath him. Uh, Chalmers is interested
in building his legacy as treasurer by doing some big
reform that marks him out as the replacement to the
Prime Minister. Whenever that comes, comes about, it might be
much longer than people predicted before the last election, because
(20:55):
why would he go anywhere given the resounding win he
just had? Uh, and Albanese has made a core part
of his leadership. This sense of steadiness, this sense of, uh,
putting an absolute premium on retaining the trust of the
electorate by not doing more than he said. The lessons
of the Rudd-gillard era are like, um, branded into his skin.
(21:18):
He was a key part of it, and he sees
he puts a lot of emphasis on the fact that
when he amended the stage three income tax cuts last election,
which was a huge call for the government to make
and was actually led by Chalmers internally, he stood up
at the Press club, admitted that he was changing course,
and he tried to keep as much trust with the
electorate as possible. So the idea that he would use
(21:41):
a round table, as we're having next week, to radically
alter the trajectory of the government and come up with
a whole bunch of new tax ideas, would run counter
to everything that Albanese has said that he's for. But
where the evidence of the feud has emerged is that
the expectations for this round roundtable and all of the
(22:02):
big ideas that were being put up by experts and
the opposition and independents and whoever else. And interest groups
got a bit too big on the government, and they
were facing daily questions about the GST, about negative gearing,
all these tough issues that they don't really intend to prosecute.
And at each point when the expectations have been tamped
down or an idea has been ruled out, such as
(22:23):
the GST, the first mover to tamp down or to
rule out has been the Prime minister. Yeah. And for
it's looked as if at least in public, this may
not be quite right. It might just be a more
blunt rhetorical style from the Prime Minister, but it's looked
like the Chalmers has followed him in step the next
day by making the same ruling out points and doing
(22:45):
the same expectations management. So that has created at least
the kind of, uh, the public appearance of being slightly
at odds. But I think it's a bit more complex
than that.
S1 (22:54):
Mhm. Okay. Maybe there's some complex mind games going on
there that we can delve into in a future podcast. The.
The Prime Minister was at pains to say this week that,
you know, he talks to the treasurer almost every day.
Just quickly, I want to check in on the opposition
because we haven't heard so much from them. Yeah. So
what's your I mean, Susan Lee has been a little
a little bit out and about this week sort of
(23:15):
talking about the round table and saying that, you know,
basically it's a foregone conclusion and, you know, it's a charade. Um,
do you think she's cutting through? How do you think
she's going?
S2 (23:26):
It's funny timing. I just had a call from one
of her senior colleagues who was just calling to complain
about what he believed to be the easy run we're
giving Jim Chalmers. But the other point he made was
that he doesn't even understand why we're quoting the opposition
in news stories.
S1 (23:42):
He doesn't understand why we're quoting.
S2 (23:44):
Obviously he wants to be quoted, but he said we're
just so irrelevant to the show at the moment. I
don't even understand why you're asking us for comment. So
that's a bit of an insight into how they're thinking.
S1 (23:53):
Oh, dear. Okay. All right. Well, I think I think
we can end there pretty much because I think that that, um,
is quite a powerful statement in and of itself. But no,
just quickly. What do you think?
S2 (24:03):
Yeah, well, I think Sussan Ley has done well to
not make any mistakes to this point. Uh.
S1 (24:09):
She that's not a, that's not, that's damning with faint praise.
S2 (24:12):
She, she hasn't she hasn't lost any skin by making
a kind of overreach, which I think other opposition leaders
in such a dire, um, electoral position would have, uh,
she's been careful not to look as if she's brawling
all the time. I think she's read the public mood
pretty well. She's. And and her team's key focus at
the moment. There's a view in the opposition that in
(24:34):
the first six months after that election drubbing, there's not
really many votes to be won. Very little attention has
been put on her. They're trying to get their internal
processes around policy making, around how they approach media, around
parliamentary tactics. They're trying to clear the decks from the
Dutton era and become a coherent force that can set
them up for more success later in the term. And
(24:55):
the word is that internally, she's doing quite a solid
job at all of that. Okay. Um, so they're not
a huge feature in public debate. They were probably never
going to be. There's very little she can do to
make the opposition super relevant right now, but I think
she's at least meeting minimum standards.
S1 (25:09):
Maybe they should just all take four day weeks for
a while until things hot up in the electoral cycle. Paul,
thank you as ever and we will see you next week.
S2 (25:17):
Thank you. Talk to you soon.
S1 (25:21):
Today's episode was produced by Kea Wong with technical assistance
from Debbie Harrington. Our executive producer is Tammy Mills, and
Tom McKendrick is our head of audio. To listen to
our episodes as soon as they drop, follow Inside Politics
on Apple, Spotify or anywhere else you listen to your podcasts.
To stay up to date with all the politics, news
(25:41):
and exclusives, visit The Age and The Sydney Morning Herald websites.
To support our journalism, subscribe to us by visiting The
Age or smh.com.au. I'm Jacqueline Maley. Thank you for listening.
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics. I'm Jacqueline Maley, it's Friday, August 15th.
This week, the Albanese government announced it would recognise Palestine
as a state. A huge foreign policy shift that was
greeted with approval by many and criticism by many others. Plus,
(00:21):
we got decidedly mixed messages about next week's Productivity Roundtable.
Joining me to discuss, we have our chief political correspondent, Paul. Welcome, Paul.
S2 (00:31):
Hi, Jackie.
S1 (00:37):
So what exactly happened inside the Albanese cabinet in the
lead up to this decision to recognise Palestinian statehood? Because
just a few weeks ago, like even two weeks ago,
I think the PM was saying that the recognition was
not imminent. And yet, here we are. Has he got
a different definition of imminence to us?
S2 (00:56):
Politicians always have tricky language around what decisions have been
made yet. What is not imminent? What they have plans
to do or don't have plans to do? But I
think this was this was a case that was less
about him using tricky language and more about just a
rapidly shifting global dynamic on this issue. You said a
(01:17):
couple of weeks or a few weeks there in your intro.
I think it was actually 11 days between the Prime
Minister going on insiders on a Sunday and his call
with the Israeli Prime Minister, Benjamin Netanyahu, where he effectively
in a it was last Thursday night at about 7:00,
they had about approximately 40 minute call, which is quite long.
(01:37):
And Albanese flagged his intent to the Israeli prime minister
and said they were moving towards recognition sooner rather than later.
They ended up making that call publicly on the Monday
after the Thursday. So two weeks and one day after
his insiders appearance. And on that insiders appearance, which was
the same day as the French president, Emmanuel Macron, announced
(01:59):
that he would try and lead the Western world into
this pro-Palestinian push. Our Prime Minister said that there were
very strict red lines that he had around recognition. Any
role for Hamas would not be contemplated, and he would
not do anything that was symbolic or token or what
would be perceived as a gesture. But that all moved
very quickly.
S1 (02:19):
Yeah, okay. I mean, some of his critics are saying, oh,
it's all for reasons of domestic politics, which seems like
a strange criticism to me because of course, the Prime
Minister is going to be interested in domestic politics. That's
kind of his job. But was that the primary, in
your understanding? Was that the primary motivator, or was it
international forces like your Emmanuel Macron's who are basically saying,
(02:40):
come and join this coalition and we'll try to end
this conflict this way?
S2 (02:44):
I think the international politics was what triggered the very
hasty move into a public recognition of a Palestinian state.
Over the last two weeks, you had France, you had Canada,
you had the UK all nearly back to back. They
are the countries with whom we've moved in lockstep on
(03:04):
our positioning on Palestine. And the view inside the government
is that we're a middle power. We have very little
role in Middle East politics, but we're also a respected voice.
We're a respected voice in the Israeli political community. We're
a respected voice in South East Asia, where there are
some very large Muslim countries that have Muslim majority countries
that have close, very strong feelings about the Palestinian question.
(03:28):
And we're a respected voice in in international affairs. We
often punch above our weight in diplomatic forums fora. So
the cover that was provided by those nations moving quickly
on recognition, meant that Albanese and his cabinet were able
to fulfill the commitment that they had made in previous
(03:49):
policy platforms of the Labor Party. And those commitments to
recognise the Palestinian state at some point in the future
were driven by domestic politics and in internal labour feeling
on the Palestinian question. There's been for about a decade
now huge internal grassroots push within labor for them to
take a stronger pro-Palestinian stance. And this movement from our
(04:10):
like minded nations allowed that to come to life.
S1 (04:15):
I suppose the criticism is that it's or the sort
of strange thing is that it's not coming in response
to any sort of moves in a positive direction from
Palestinian authorities or towards any sort of outbreak of democracy
or democratic institutions within Gaza and the West Bank. But
it's more coming from the need seen by countries like Australia,
(04:37):
to put international pressure on Israel to end the conflict
or make moves towards ending the conflict.
S2 (04:43):
I think that's spot on. Its recognition in previous eras
of thinking has not really been conceived of as a
diplomatic tool to create change, but because of Israel's increasingly
unjustifiable war effort that has isolated it so dramatically. The
balance is tipped away from them from the Israeli view
(05:05):
and Western nations, which have previously been allied to Israel
and do still have friendly relations, are so exasperated by
what's going on that they have decided to use recognition
as a tool to try and create change and, and
and potentially dissuade Israel from continuing, but also to persuade
some of the Arab nations and the US to get
(05:25):
involved and bring an end to this war.
S1 (05:27):
What was the sort of political reaction to the decision
at home?
S2 (05:30):
It was all very stock standard.
S3 (05:32):
For this government to take this action offends every fair thinking,
decent Australian.
S2 (05:38):
The opposition jumped back into its fervently pro-Israel position that
characterised a lot of the politics under Peter Dutton.
S3 (05:47):
To recognise unilaterally, a Palestinian state does one thing for
the terrorists it rewards them and it emboldens them.
S2 (05:56):
The sections of the media, particularly News Corp, uh, quickly
branded Anthony Albanese, a friend of Hamas, for making this decision.
The tabloids in each of the cities and the Courier Mail,
The Daily Telegraph, the Herald Sun and the Adi, I
think all had very similar looking splashes on whichever day
the next day was the Tuesday. All of them mentioning
(06:16):
Hamas and how this was a win for them, which
is obviously contested. I think what was telling also was
to your question, Jackie, about whether this was driven by
domestic politics. Labour backbenchers absolutely pumped this news out on
their social media feeds. On the Monday and Tuesday, you
could see how much it was a pressure release valve
(06:36):
for a lot of Labour MPs, particularly those on the left,
who had spent months and months getting absolutely hammered by activists,
but also increasingly non-activists who are fed up with what
they're seeing on their TV screens and who believe that
Labour hasn't quite done enough. So it was a pressure
release valve for the Labour Party. It was met with
(06:56):
a shrug of the shoulders from the hard left pro-Palestinian
movement who said this This will do nothing on the
ground and who want to see more. What they say
is practical sanctions. The government says that it has no
real power to sanction Israel anyway. And they would also
be symbolic. So pretty expected reactions from across the political spectrum.
S1 (07:14):
Yeah, yeah. It's interesting you say that about the backbenchers. And,
you know, all these MPs are particularly, as you say,
Labour MPs getting a lot of mail on this subject.
And Albanese, you know, he's in an electorate that's very
heavily sort of you know, the Greens are his main
opposition in Grayndler in Sydney's inner west. I mean, it's
a huge issue within that electorate. So he'd be filling
(07:36):
it at home as well.
S2 (07:37):
Totally. And he's had to, uh, he's had to deal
with protests outside his electorate office for long periods that
had blocked his staff being able to go to work.
And just on that question of MPs receiving mail for
a long time, there's been this narrative that this is
not within the top set of issues in the Australian electorate,
and I think that a lot of weight can probably
be put in that argument. But I heard an interesting
(07:57):
view from Jerome Laxale, who's the member for Bennelong in
Sydney's inner inner north. Many of our listeners would know
that electorate well. And he said that this has been
the number one, two and three issue in his inbox
for a long period of time. And I said to him,
does that include the inflation crisis and all other top
of mind issues? And he said this is the biggest one.
(08:18):
It's not just activists. It's not just Change.org bots. It's
people in his electorate concerned.
S1 (08:25):
Yeah, I think once you get images of starving children
on the television, people do tend to get upset. Coming
back home to some of these pertinent to the domestic
economy issues. Next week. Are you excited? Are you getting pumped?
Have you got your outfits planned for Canberra? Coachella?
S2 (08:47):
Have you booked your room because the Airbnbs are chockers,
I hear.
S1 (08:52):
Of course we're talking about the Productivity Summit or Roundtable,
if you will, which is happening next week, and we're
getting a lot of mixed messages about it. In fact,
if you're trying to like me, you're trying to fashion
a coherent narrative in the sort of lead up to
this summit. It's almost impossible because on the one hand,
you know, Albanese is going, yes, we're open to big reform.
(09:12):
We want to be a big reforming government, just kind
of maybe not now. And they're pouring cold water on
almost every idea that's come up in in the lead up.
What what is the latest news? Can you cut through
this all to tell us what's really going on?
S2 (09:26):
I do not blame you for not being able to
form a coherent understanding of where this is all going.
And the blame for that lies at the feet of
the Prime Minister and the treasurer, who haven't really been
able to set a coherent message up in terms of
what they are trying to solve and what the solutions
are and what the trade offs are inherent in those solutions.
(09:49):
They talk a lot about the productivity challenge. Famously, we've
talked about this in this podcast many times. That's a
word that not many people understand. Yeah. So if you're
trying to set up a get public sentiment to the
place where they understand that there is a big problem
that needs to be solved, that affects their hip pocket,
and that doing some of these big changes that might
have losers on the tax side, or the workplace relations side,
(10:10):
or anything else to allow those people to understand that
they are still worth pursuing because they make everyone better off. Overall,
then critics have a fair argument. I think at this point,
to say that the government hasn't been doing that kind
of shaping of public opinion.
S1 (10:25):
Yeah, well, maybe they're hoping that the Productivity Roundtable itself
will do some of that work on productivity. And as
our friend of the podcast, Shane Wright, is fond of
telling us, productivity is not about working harder, it's about
working smarter. But we did get some productivity data this
week that was sort of hidden amid the good news
(10:46):
of the RBA cutting rates. What was that productivity number?
S2 (10:51):
This is one of those moments where you think to yourself,
why on earth would you be a politician? Jim Chalmers
is just I was just thinking about what his office
would have been feeling at this moment. So he's just
gone through an inflation crisis. Rates are finally coming down.
He can claim a lot of credit for that and does.
It's within the target rate band. And we're probably going
to see some more interest rate cuts.
S4 (11:12):
These interest rate cuts and the progress that we've made
in our economy, they put us in good stead for
the global uncertainty that surrounds us and for the big
economic challenges which confront us as well, inflation.
S2 (11:26):
And then Michelle Bullock, the reserve Bank governor, releases a
statement saying rates are down. Good news. Jim Chalmers hope
she does a press conference saying there'll be future rate cuts.
People feel happy in their homes and pleased towards the
government and then bang the RBA at that moment, at
that same afternoon, decide to release their updated, uh, assumptions
on what will happen to productivity over the next few years.
S5 (11:50):
That for the purposes of our forecast period, we think
that the productivity assumption needs to be a bit lower. Interestingly, um,
the reason one of the reasons we've come to this
position is that our forecasts were such that we were
hitting our employment and our inflation forecasts, but we were
(12:10):
overestimating our GDP and our consumption forecasts. So there was
a tension in the forecast. Why were we hitting our
targets when we weren't hitting?
S2 (12:19):
And and they use those assumptions to do their forecasting
around growth and rates and the trajectory for the economy,
because all of those help flow into their decision making
around monetary policy. And this productivity assumption drops from 1%
over the next few years to 0.7 of a percent,
which has actually been closer to the average rate of
(12:41):
productivity over over the last 5 or 10 years. And
those numbers seem very close to the lay observer. But
if you had Shane write on here, and I'm sure
he's raring to go ahead of next week's Productivity Roundtable,
he'll tell you that, uh, that change in productivity in
a yearly basis over a long period of time has
a significant effect on economic growth, on living standards, on
(13:04):
how much people's wages will rise, because it effectively means
that we're not using our resources and our inputs as
effectively as possible, and people will be, on average, poorer
compared to the 1%. So Jim Chalmers sits there thinking
it's meant to be a fantastic day for me. And
then the next day's headlines, page one, I think of
the Australian Financial Review and our paper were all leading
(13:25):
off on the double edged nature of the news being
rate cut, yes, but worse productivity and pretty bad timing
ahead of next week's roundtable.
S1 (13:32):
You can always trust an econocrats to kind of come
in and rain on everybody's parade.
S2 (13:38):
They're just so negative.
S1 (13:39):
Yeah, I know. They're so, so negative. It looks now
like housing and housing approvals are going to be a
focus of the Productivity Summit. And you wrote about that
this week. Tell us what's going on with housing approvals
and how that can lift productivity.
S2 (13:54):
Well the government's done a lot of tamping down of
expectation on areas such as tax reform items like the
capital gains tax, negative gearing, which we've heard so much
about over the years, about how they are good reforms that, yes,
create losers but are still worthwhile. The government is doing
a lot of backgrounding in the last week or so
(14:15):
to say that those big items around tax and other
contentious issues will not be the ones that are immediately
solved at next week's roundtable. There might be set up
for more work after the roundtable, after a debate has
started and then pursued in future budgets. But next week,
the agenda has been narrowed to red tape and excessive regulation,
(14:36):
and how to get the economy and key areas of
supply moving more quickly. There is broad consensus across mining
firms who want to build mines more quickly. Among green
energy firms, who want to get solar and wind farms
up more quickly than they currently are, and they are
very slow. These approval processes and construction firms who want
(14:56):
to build housing. There's broad consensus as well as inside
the cabinet that the environmental laws are clogging up the
building of all of these types of items, and causing
us to move less quickly than we can on the
green energy transition, and to build far fewer houses than
we need to. So there's a big effort behind the
scenes to get to fix some of that.
S1 (15:15):
Yeah. And I feel like, you know, the government's got
a lot of skin in the game. On the housing
approval issue, particularly because they've promised to build so much housing.
And it is actually one thing where the opposition can
very credibly say, you said that you would build, you know,
10,000 homes and actually only one has been built. So
it's something where the report card is very easily kind
(15:35):
of tallied up. There's also road user charges, which is
maybe not a sexy subject, but quite an interesting one
because it sort of points to the difference, you know,
a transition, an economic transition and an environmental transition away
from petrol cars. Yeah, I'm sure there's a different word
for them. But cars that use petrol and EVs.
S2 (15:56):
So diesel combustion engines, I think they call them.
S1 (15:59):
That's the one that I'm talking about. To me, cars
are just red cars, blue cars, white cars, etc..
S2 (16:04):
What car do you have?
S1 (16:04):
Um, I've got a dark blue, a midnight blue, um,
and it uses petrol. So more and more people are
taking up EVs. You know, that's obviously an industry that
will help us move towards the energy transition that we
need to make. But that means that fuel excise goes
down because fuel excise is essentially a tax on petrol.
The fewer people using petrol, the less money the government
(16:27):
collects in fuel excise. So what are they going to
do to make up that revenue?
S2 (16:32):
Well, they're moving towards a road user charge that will
bring in EV drivers. Our proportion of EVs is is
still far fewer than uh, some countries like China, which
has moved much more quickly in that direction. There seems
to be in Australia an attachment to using petrol cars,
but we are moving more quickly. In the last couple
(16:52):
of years, a bigger and bigger proportion of cars being
sold are EVs. And Jim Chalmers has been flagging this
for quite a while, for years really into well into
the first term of his government. He was flagging work
with the states to fix the fuel excise issue. In
a similar vein, fuel excise. The tobacco excise is also
facing huge black holes, and these are really critical because
(17:15):
of the booming black market for tobacco. So between fuel,
fuel and tobacco that they're actually key federal revenue sources.
And over time, if those black holes continue to enlarge,
and that's a really bad thing for our budget. So
there will be something on the on the road user
charge at some point over the next few months, it
looks like, and there'll be trials on which cars will
(17:37):
be which EVs will be dragged into it and at
what point. But we're kind of yet to see the
detail on that.
S1 (17:42):
Yeah. Okay. And on a more popular sort of note,
there has been the prospect raised of a four day week.
So the ACTU has made headlines about this. Business groups
are very up in arms about it. It seems to
me it's putting the cart a little bit before the horse,
because don't you need productivity gains before you can drop
back to four days a week? But I don't want to,
you know, I don't want to pour cold water on this.
(18:03):
What has the government said about the prospect of a
four day working week? Good things.
S2 (18:07):
They're pretty cold on it.
S1 (18:08):
Can I take tomorrow off?
S2 (18:10):
Well, when they start printing just four newspapers in a week,
maybe we can. We can. We can have a four
day week, too.
S1 (18:16):
Let's not put the idea in their head.
S2 (18:18):
Um, the four day workweek won't get much traction with
orthodox economists, because one of the key benefits of productivity
over time, when you can get your society working more efficiently.
One of the byproducts of productivity is not just increased wages,
it's actually increased leisure time. Yeah. And if you look
(18:39):
over time, productivity grows and so does the amount of
time you get to spend at home with your family,
or going to the footy or writing books or doing
whatever else. So economists will laugh that that idea out
the door.
S1 (18:49):
Okay. Um, well, I don't know. Maybe we can we
can look to the robots to, um, make up that
fifth day for us. I the other thing that's again,
speaking of populist appeal, there have been some reports of
tension between Anthony Albanese and Jim Chalmers leading up to
this summit. I don't know if this is just the
work of hopeful journalists, you know, hoping for some internal
conflict that they can report on. Far be it from
(19:12):
me to, you know, suspect journalists of wanting conflict that
they can then make headlines out of. But, I mean,
it does seem like Chalmers is a little bit more
open to reform, particularly tax reform. Albanese seems to have
a much more cautious and risk averse approach. And they're
coming from different directions. Right. Like they've got slightly different
objectives and they've got different personal interests and maybe even
(19:34):
different political interests. So what's your take on on the
Albanese v Chalmers beef?
S2 (19:40):
Yeah. Well the starting point I don't think it's a beef.
So I'm going to disappoint listeners there. The starting point
is what you've just said that they they do have
different roles in the government.
S1 (19:49):
Can we call it a stoush. A fight?
S2 (19:52):
I think it's I think it's even more gray than that.
There's something in the in the differences of, um, there's
there's something there in the difference of approach And the
different intents they have and potentially how open they are
to to moving more quickly. But they have a pretty
close working relationship. Uh, there's not been any overt public
(20:12):
feud in between them, which is unlike Howard and Costello.
And unlike Hawke and Keating, their feuds were much more clear.
There's more nuance in this one, but I'm not suggesting
there's no feud in at all. Fundamentally, Chalmers is hyper
ambitious and eventually wants to become the Prime Minister. He
can't say that at this point. The Prime Minister has
(20:32):
just had a thumping election win, so he's pretty comfortable
in his own shoes and doesn't need to worry as
much about the rivals underneath him. Uh, Chalmers is interested
in building his legacy as treasurer by doing some big
reform that marks him out as the replacement to the
Prime Minister. Whenever that comes, comes about, it might be
much longer than people predicted before the last election, because
(20:55):
why would he go anywhere given the resounding win he
just had? Uh, and Albanese has made a core part
of his leadership. This sense of steadiness, this sense of, uh,
putting an absolute premium on retaining the trust of the
electorate by not doing more than he said. The lessons
of the Rudd-gillard era are like, um, branded into his skin.
(21:18):
He was a key part of it, and he sees
he puts a lot of emphasis on the fact that
when he amended the stage three income tax cuts last election,
which was a huge call for the government to make
and was actually led by Chalmers internally, he stood up
at the Press club, admitted that he was changing course,
and he tried to keep as much trust with the
electorate as possible. So the idea that he would use
(21:41):
a round table, as we're having next week, to radically
alter the trajectory of the government and come up with
a whole bunch of new tax ideas, would run counter
to everything that Albanese has said that he's for. But
where the evidence of the feud has emerged is that
the expectations for this round roundtable and all of the
(22:02):
big ideas that were being put up by experts and
the opposition and independents and whoever else. And interest groups
got a bit too big on the government, and they
were facing daily questions about the GST, about negative gearing,
all these tough issues that they don't really intend to prosecute.
And at each point when the expectations have been tamped
down or an idea has been ruled out, such as
(22:23):
the GST, the first mover to tamp down or to
rule out has been the Prime minister. Yeah. And for
it's looked as if at least in public, this may
not be quite right. It might just be a more
blunt rhetorical style from the Prime Minister, but it's looked
like the Chalmers has followed him in step the next
day by making the same ruling out points and doing
(22:45):
the same expectations management. So that has created at least
the kind of, uh, the public appearance of being slightly
at odds. But I think it's a bit more complex
than that.
S1 (22:54):
Mhm. Okay. Maybe there's some complex mind games going on
there that we can delve into in a future podcast. The.
The Prime Minister was at pains to say this week that,
you know, he talks to the treasurer almost every day.
Just quickly, I want to check in on the opposition
because we haven't heard so much from them. Yeah. So
what's your I mean, Susan Lee has been a little
a little bit out and about this week sort of
(23:15):
talking about the round table and saying that, you know,
basically it's a foregone conclusion and, you know, it's a charade. Um,
do you think she's cutting through? How do you think
she's going?
S2 (23:26):
It's funny timing. I just had a call from one
of her senior colleagues who was just calling to complain
about what he believed to be the easy run we're
giving Jim Chalmers. But the other point he made was
that he doesn't even understand why we're quoting the opposition
in news stories.
S1 (23:42):
He doesn't understand why we're quoting.
S2 (23:44):
Obviously he wants to be quoted, but he said we're
just so irrelevant to the show at the moment. I
don't even understand why you're asking us for comment. So
that's a bit of an insight into how they're thinking.
S1 (23:53):
Oh, dear. Okay. All right. Well, I think I think
we can end there pretty much because I think that that, um,
is quite a powerful statement in and of itself. But no,
just quickly. What do you think?
S2 (24:03):
Yeah, well, I think Sussan Ley has done well to
not make any mistakes to this point. Uh.
S1 (24:09):
She that's not a, that's not, that's damning with faint praise.
S2 (24:12):
She, she hasn't she hasn't lost any skin by making
a kind of overreach, which I think other opposition leaders
in such a dire, um, electoral position would have, uh,
she's been careful not to look as if she's brawling
all the time. I think she's read the public mood
pretty well. She's. And and her team's key focus at
the moment. There's a view in the opposition that in
(24:34):
the first six months after that election drubbing, there's not
really many votes to be won. Very little attention has
been put on her. They're trying to get their internal
processes around policy making, around how they approach media, around
parliamentary tactics. They're trying to clear the decks from the
Dutton era and become a coherent force that can set
them up for more success later in the term. And
(24:55):
the word is that internally, she's doing quite a solid
job at all of that. Okay. Um, so they're not
a huge feature in public debate. They were probably never
going to be. There's very little she can do to
make the opposition super relevant right now, but I think
she's at least meeting minimum standards.
S1 (25:09):
Maybe they should just all take four day weeks for
a while until things hot up in the electoral cycle. Paul,
thank you as ever and we will see you next week.
S2 (25:17):
Thank you. Talk to you soon.
S1 (25:21):
Today's episode was produced by Kea Wong with technical assistance
from Debbie Harrington. Our executive producer is Tammy Mills, and
Tom McKendrick is our head of audio. To listen to
our episodes as soon as they drop, follow Inside Politics
on Apple, Spotify or anywhere else you listen to your podcasts.
To stay up to date with all the politics, news
(25:41):
and exclusives, visit The Age and The Sydney Morning Herald websites.
To support our journalism, subscribe to us by visiting The
Age or smh.com.au. I'm Jacqueline Maley. Thank you for listening.
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